Low Carbon, Environment-Friendly Building Coatings Have Bright Prospects in China

By Lin Xuanyi, Shanghai Sto Co., Ltd

In 2012, in the context of the domestic economic slowdown and the more stringent regulations on the real estate market, China’s building coatings sector still achieved extraordinary success.
The annual growth of China’s real estate investment averaged 24.9% over 2000-2012. But China’s 2012 real estate investment was 7.18 trillion, up only 16.3% year-on-year. Despite the slowdown of growth, around 3.0 billion square meters of construction area was completed in China in 2012. Such a huge investment and completed construction area maintained the strong impetus for development of building coatings.

1. Rapid growth of output

China produced 4.16 million tons of building coatings in 2012, up 20.4% year-on-year. By region, the output of building coatings in Shanghai, Guangdong province and Hunan province ranked as the first three, and reached 855 thousand tons, 774 thousand tons and 551 thousand tons respectively, accounting for 20.6%, 18.6% and 13.2% of the national total. China’s output of coatings and building coatings during 2000-2012 is shown in Table 1.
Since 2000, building coatings have accounted for around 1/3 of the nation’s total coatings output. China’s average annual growth of building coatings output was around 18.1% during 2000-2012, being slightly faster than that of coatings in general (17.5%) and faster than the GDP growth.
According to statistics and estimates, China’s sales value of building coatings reached around RMB72.0 billion in 2012, accounting for 1/4 of the coatings sales value.

Table 1   China’s Output of Coatings and Building Coatings during 2000-2012

Year    Output of coatings (kt)        YOY growth(coatings output)/%?     
Output of building coatings (kt)    Share of building coatings in the total/%
YOY growth (building coatings output)/%?
2000    1 840    7.4    563    30.6    9.3
2001    1 820    -1.3    588    32.4    4.4
2002    2 020    11.0    653    32.4    11.1
2003    2 420    19.8    721    29.9    10.4
2004    2 980    23.4    1 134    38.0    57.3
2005    4 040    35.6    1 301    32.2    14.7
2006    5 290    30.9    1 554    30.6    19.4
2007    5 970    12.9    1 796    30.1    15.6
2008    6 380    6.8    1 941    30.4    8.1
2009    7 550    18.4    2 617    34.6    34.8
2010    9 670    28.0    3 518    36.4    34.5
2011    10 800    11.7    3 455    32.0    -1.8
2012    12 720    17.8    4 160    32.7    20.4


2. Environment-friendly products become the mainstream of development

Building coatings products in China still mainly include latex paints. For interior wall coatings, domestic enterprises and users pay more attention to environment-friendly products. For exterior wall coatings, the development trend of smooth building coatings to textured building coatings is obvious. In addition to elastic building coatings, the market share of smooth building coatings is also declining, and the output of real-stone lacquer and textured coatings has increased considerably. High-grade paint decoration buildings generally use real-stone lacquer and textured coatings. The real-stone lacquer and textured coatings feature strong coating texture and good decorative effect, and the crack resistance of real-stone lacquer and textured coatings is generally superior to that of smooth building coatings. The consumption of real-stone lacquer and textured coatings is large, needing more than 3 kg coatings per square meter. When using smooth building coatings, 1kg coatings can paint 3 square meters. Therefore, under the more severe real estate market environment, the building coatings enterprises can still have uncommon performance. In addition, these textured coatings, applied millimeters thick, are “thick coating films,” and have a long service life under the same quality of coating film. When real-stone lacquer and textured coatings are used, good base coating and finishing paint can improve the color retention and service life of the overall coating result. Prolonged service life has great significance for the development of low carbon building coatings.
Some of the new products such as water-in-water multi-color coatings, reflective thermal insulation building coatings, environment-friendly coatings, smart coatings and inorganic dry powder building coatings also will be further developed.

3. Painting technologies

Although users select building coatings for decoration, they actually use coating film rather than coatings. Only through painting and forming a film firmly attached on the basis surface under a dry condition, building coatings can protect, decorate and have other effects. Painting is an important aspect in the application of building coatings. Building coatings enterprises should ensure the quality of building coatings, but guaranteeing the quality of coatings’ film is equally important or even more important.
The painting methods of building coatings mainly include rolling, spraying and scraping. The majority of work relies on manual operations with a low efficiency. The high decorative effect painting technologies like imitation stone and imitation brick, artistic and individualization have been improved. China has made progress in painting technology, painting process, painting organization and painting management. The painting of buildings has continuously developed toward flow murals, and the imitation stone and imitation brick has already reached the level of mixing the faux and the real.
The painting technology innovation has become an important part in the innovation and transcendence of building coatings. Only when building coatings have obvious advantages compared with all other building decoration materials like stone, ceramic tiles and wall cloth, can the building coatings sector maintain and consolidate its position of producing the main decoration material.

4. Standards

In 2012, China issued 15 standards related to building coatings, including GB/T 1707-2012 (lithopone), HG/T 4343-2012 (water based multi-color building coatings), etc. In addition, the standards like GB/T9755 (synthetic resin emulsion exterior wall coatings), JG/T 235-2008 (architectural reflective thermal insulation coatings), GB/T9780 (Test Method for Dirt Resistance of Film of Building Coatings) and HJ/T 201 (Technical Requirement for Environmental Labeling of Products — Water Based Coatings) have been submitted for approval. Among which, in GB/T9755, the impermeable requirement is added with the classification index. JG/T235 has requirements for the color performance of high brightness, middle brightness and low brightness. In HJ/T 201, clean production is added, there is no APEO (alkylphenolethoxylate), and the content of free formaldehyde is reduced to 60mg/kg.
The American Society for Testing and Materials (ASTM) is formulating ASTM WK 38233 (Standard of Test Method for Dirt Resistance of Building Coatings). D01.42 Building Coatings Branch of ASTM is responsible for formulating the standard.

5. Bright Prospects

In general, the building coatings market is relatively favorable in 2013. China’s economy has slowed down, but the country's urbanization has accelerated. It is estimated that China’s output of building coatings will increase by around 10% in 2013.
Under the central government’s macro regulation and control, on one hand, the construction of indemnificatory housing (government-sponsored affordable housing) will increase, favoring low- and middle-grade building coatings. On the other hand, measures like restricting commercial home purchases and loans, and the collection of personal income tax affects negatively on the development of building coatings.
In the first seven months of 2013, China’s real estate investment reached RMB4.43 trillion, up 20.5% year-on-year. The performance of the real estate market was better than expected.
Building coatings with characteristics like real stone lacquer, textured coatings and elastic coatings continue to be favored, and the demand for conventional smooth building coatings has declined. New products such as water based multi-color coatings, reflective thermal insulation coatings, environment-friendly coatings and smart coatings have development opportunities.
The controlled raw material cost has offered a good chance for enterprises to adjust the structure.
The building coatings market is an open market with fierce competition. The performance/price ratio is a key focus of the users. A high performance/price ratio is necessary to win market share, and branding and differentiation are powerful means of marketing. Innovation and transformation throughout the whole process (including painting) are prerequisites for progress and development. With the increase of labor costs, mechanical painting will attract more and more attention and be promoted. Small building-coating enterprises with distinctive characteristics have development opportunities.